Monday, August 20, 2012

Consolidation in the Health Insurance Market

Dealbook notes the acquisition of Coventry Health Care by Aetna as a trend in this sector:

Aetna’s acquisition of Coventry is the latest deal in an industry that has been spurred to consolidation in part because of the Obama administration’s sweeping expansion of health care coverage in the country. Last month, WellPoint agreed to buy Amerigroup for about $4.9 billion.

Before Mitt Romney decided that Medicare cost containment was something to dishonestly campaign against, Paul Ryan and President Obama were both proposing that cost containment was a good idea. The difference perhaps was that the President’s idea for doing so involved price controls while the Republicans wanted to rely on more competition. Consolidation, however, is often a euphemism for the larger players to increase their market share on the hope of reducing competition. If these Republicans are serious about relying on competition – shouldn’t they be condemning this consolidation?
Update: A hat tip to a devoted reader of Mark Thoma’s blog named Anne for providing us with a link to James C. Robinson who discusses the consolidation in the hospital sector.

15 comments:

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The public health system is coming under more pressure with funding cuts and an inability to attract qualified staff. The result is a waiting list in the public hospitals to obtain non urgent surgical procedures. Waiting lists can vary depending on the condition requiring attention, but can extend to over a year for some procedures.

The health insurance industry has confronted many external challenges in the recent past, such as rising costs, a shortage of primary care physicians, uncertain political and regulatory environments, a shifting customer mix anda struggling economy, just to name a few. However, the final ruling of the Supreme Court on Health Care Reform last month has resuscitated the industry by removing a major source of uncertainty. James

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